Peter Foster is the Telegraph's US Editor based in Washington DC. He moved to America in January 2012 after three years based in Beijing, where he covered the rise of China. Before that, he was based in New Delhi as South Asia correspondent. He has reported for The Telegraph for more than a decade, covering two Olympic Games, 9/11 in New York, the 2004 Boxing Day tsunami, the post-conflict phases in Afghanistan and Iraq and the 2011 Fukushima disaster in Japan.

G20 and the art of Chinese kite-flying

IF you'd only been glancing at the headlines this week, you'd be forgive for thinking that the post-War world financial order – already tottering like a drunken farmer these past six months – is about to be upended once and for all.

The 'big' finance story is that China is pushing the idea of ending the dollar's reign as the global reserve currency, an idea which emerged from a speech by Zhou Xiaochuan, the governor of China's central bank earlier this week.

The speech – which China watchers noted was also published in English, a sure sign it was intended for a global audience – proposed the notion of a 'super-sovereign' reserve currency.

Initially this was dismissed by the Obama administration, with the President going on TV to say that he didn't think there was any need for a global reserve currency when the dollar was so strong.

Paul Volcker, the former Fed Chairman, rebuked China for being 'disingenuous' given that part of the dollar's strength comes from the fact that China chose to invest all those trade surpluses in the greenback – for good reason, it's still the safest place to go.

By yesterday however, the language had softened. Timothy Geithner, the embattled US treasury secretary, said that the US was 'quite open' to a global reserve currency run by the IMF.

As my colleague Ambrose Evans-Pritchard wrote, the mere hint that the US would even consider such an idea was enough to send shockwaves through the markets.

"The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance."

I must admit that when this story first appeared, I didn't really give it much credence, beyond some clever G20 kite-flying on the part of the Chinese.

Why? Well, because on the day that governor Zhou released his speech I was sitting in a Chinese government briefing on the upcoming G20.

On the panel was Hu Xiaolian, a vice governor of the People's Bank of China, and she gave a rather more realistic appraisal of the likelihood of a global currency becoming a reality any time soon.

Asked by a Russian journalist about whether China would support Russia's calls for such a currency, she said, rather diffidently, that the idea was hypothetically 'worth discussing' but quickly added, "we can't dismiss the possibility of a diversified monetary system but at the moment we should focus on the regulation of the international monetary system based on the US dollar"

So the dollar isn't going anywhere any time soon. Careful reading of the governor's speech makes this clear, but that's not the kind of detail that makes it into headlines and in the 140-character age of twitter, its headlines that make news.

Of course Vice-governor Hu's remarks to be a more sober, accurate and fair summation of the geo-financial reality than the blasts of hot air that have filled the airwaves this week on this subject.

It seems to me that China is indulging in some perfectly understandable posturing ahead of this G20 summit – Wen Jiabao's uncharacteristically frank remarks about his 'worries' on safety of China's dollar assets also fit into this category.

The global financial order is changing, and China is determined that it will have a voice commensurate with its newfound position, and that goes far beyond reforming the voting-rights on the IMF.

And no harm in flying a few pre-conference kites, I suppose, just to ram the point home.